GrafTech (GTI) Sees H115 Operating Cash Flow at Low-End of Expected Range
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GrafTech (NYSE: GTI) announced that its EBITDA* and operating cash flow for the first half of 2015 is now expected to be at the low end of the previous guided targeted ranges of $30 million to $40 million each, and could fall slightly below the targeted ranges.
The Company reported that market conditions remain challenging in both the Industrial Materials segment and Engineered Solutions segment. While pricing in the Industrial Materials segment is generally consistent with expectations, volumes remain under pressure due to weak electric arc furnace steel production in its key North American and European markets driven by high steel import levels. In the Engineered Solution segment, sales are also lower than expected as industrial and oil and gas sector demand continues to be weak. Additionally, lower volumes and pricing pressure have affected product sales into the advanced consumer electronics market. In light of these market conditions, the Company will reduce production rates further to align with current market demand.
Update on Convertible Preferred Investment and Tender Offer
As previously announced, GrafTech has agreed to issue $150 million of convertible preferred stock to an affiliate of Brookfield Asset Management (Brookfield) pursuant to an investment agreement. This transaction will close upon receipt of the required regulatory approvals, which are expected to be received in July or early August.
Also, as previously announced, Brookfield has launched a tender offer to acquire up to all of the outstanding shares of GrafTech common stock at a purchase price of $5.05 per share. The tender offer will expire at 12:00 midnight, New York City time, on July 7, 2015, unless extended in accordance with the terms of the merger agreement and the applicable rules and regulations of the Securities and Exchange Commission. Closing of the tender offer is subject to receipt of required regulatory approvals.
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